Gov. Luther H. Hodges of North Carolina, honorary chairman of the National Committee of Business and Professional Men and Women for Kennedy-Johnson, has reviewed with Senator John F. Kennedy, Democratic presidential candidate, problems of particular concern to the business community of the United States. Summarizing the high points of his replies to specific questions, Senator Kennedy authorized the Governor to issue the following statement:
The businessman's first concern is that of every other citizen of the United States: the security, progress, and well-being of our country. As principal innovator and organizer of economic activity in our free enterprise system, he has the responsibility of making the United States the most productive country in the world. The program of the Democratic Party is dedicated to the achievement of a prosperous and progressive economy.
The Republican Party has the reputation, among businessmen in particular, of being the party of business. This is not justified. We have had two recessions within the past 7 years under a Republican administration. Many forecasters anticipate still a third recession. Idle plant capacity is not good for business. The steel mills are now operating at less than 55 percent of capacity. Automobile production has not been much higher. Homebuilding is down drastically. Our railroads have never adequately recovered from the 1957-58 recession. Our textile industry is facing serious trouble. Corporate profits are declining. During the last 8 years, the number of business failures has been the highest in our history.
It is a matter of record that business had prospered more under the Democrats. What is good for the country as a whole is also good for business. The expansion of production and demand is the best cure for what ails business. Expansion permits greater sales and higher profits. Senator Kennedy is on record as favoring such a policy of expansion.
Getting down to specific problems of concern to business, Senator Kennedy feels that the most effective antidote for inflation is increased productivity and greater production. He advocates a balanced budget, except during times of emergency affecting the national security, or high rate of unemployment. Collective bargaining must take public as well as private interest into account. Federal monetary and credit policies must be applied equitably and with reasonable foresight as to timing. The Republican tight-money policy, with the ostensible purpose to stop inflation, has failed, probably because the inflation was not caused by excessive demand. Cost of living rose almost 12 percent under the Republicans. They appear to have pursued a tight-money policy because they thought the policy sound despite the condition of our economy. In the 1957 recession, for example, they tightened money when they should have made it easier to obtain. Unnecessarily tight money has discouraged housing starts, consumer purchasing, and growth-producing investments. To forge ahead in the critical international competition which we face, we require increased production, increased credit, and an improvement of the financial climate.
With respect to taxes, Senator Kennedy does not feel that with the economy showing signs of stagnating, this is the time to increase taxes. With greater production and an improvement in general business conditions, additional tax revenues can be obtained under existing rates. He favors a review of our tax system which has not been revised since 1954. Among proposals deserving consideration in any program of tax reform, would be an improvement in the laws relating to depreciation allowances which would permit the financing of capital plant replacement through internal sources. Business investment in plant and equpiment must be encouraged as a generator of increased productivity and economic growth, and of new job opportunities. The high cost of capital plant replacement has acted as a barrier to investment, particularly when business firms are not able to obtain adequate financing at reasonable cost.
Senator Kennedy believes strongly that our monetary policy should be adapted to provide credit at reasonable rates for small business. He favors the enhancement of competition without favoritism and the increased channeling of defense contracts to efficient small firms. Today, 86 percent of our defense contracts, amounting to $19.6 billion, is negotiated, and only 14 percent is let on a competitive basis. The small-business share of the competitive contracts is approximately 48 percent; that of the negotiated contracts 12 percent. This demonstrates that, when given an opportunity to compete on business that it is capable of handling, small business can hold its own. In addition, a greater effort must be made to make available to small business new techniques and ideas of which the Government, through its widespread financing of research and development, becomes aware. Certainly, a more positive approach to the use of the Small Business Administration will do much to relieve current stresses for small business in this country.
With respect to foreign trade and investment problems which seriously affect domestic industry, Senator Kennedy points out that foreign trade is a two-way street, and that if we wish to sell our goods abroad we must buy from foreign countries. He favors expansion of our foreign trade and private investments abroad, with the qualification that we must lessen serious adverse effects on our domestic industry that can arise from foreign competition. Having long supported programs of assistance to workers, industries, and communities that have been so affected, he deems a liberal trade policy to be in our national interest but feels that adverse domestic consequences of such a policy are the concern of the entire Nation. Economic displacements due to world trade become lessened as the opportunities resulting from world trade increase.
In answer to charges made by his opponents that the policies of the Democratic Party tend to welfare statism, the Senator points out that the Democratic Party has brought social and economic progress to our country and that one measure of its success in this respect is that all its reforms have since been adopted by the Republicans. The new programs that the Democratic Party now puts forward will not alter our free enterprise system which has made us the strongest nation in the world and provided our people with the highest standard of living. The business community, like all America, is interested in, and will continue to benefit from the welfare of the American people - their level of education, their health, the adequacy of their housing, the state of our natural resources, and our progress in scientific research.
The Democratic Party enjoys labor's support because it has improved the lot of the laboring people. It is equally interested in the welfare of business because it believes that both business and labor are best served by a dynamic, growing economy based upon our free private-enterprise system. Only through evidencing the workability of our system can we assure its acceptance and perpetuation.
In answer to frequent reference in the press to economic advisers whose views are unpopular with businessmen, Senator Kennedy has this to say:
Anybody who aspires to the Presidency of the United States must have the objectivity and detachment to listen to and evaluate every responsible point of view. I have always endeavored to do this. I consult advisers of both liberal and conservative thought, just as any corporate executive seeks the advice of all of his associates. Then I make up my own mind.